Wall Street is hoping that December will continue its historic track record of proving to be one of the strongest seasonal months, sparking a stock market reversal in time for a year-end bull run. Stocks are on pace to conclude an uneven month. November was a typically strong month, as was December, but this time the pullback in major technology stocks weighed on the major averages. On Friday, the Dow Jones Industrial Average and S&P 500 ended the month marginally higher, while the tech-heavy Nasdaq Composite Index took the brunt of the decline, dropping nearly 2%. All three indexes fell sharply before rebounding at the end of the month. However, seasonal tailwinds may return to the stock market in December, sending stocks back to all-time highs. Historically, this month has been the third best month of the year for the Dow and S&P 500 since 1950. It was also the third strongest month for the Nasdaq since 1971, according to the Stock Traders Almanac. “We think we’re going to move out of a perfect storm into a better environment, maybe not perfect,” said Ken Mahoney, CEO of Mahoney Asset Management. The recent weakness “believe it or not, we feel, is making the year-end bull run even stronger.” Optimists cite bullish evidence supporting the current market. Wall Street expects strong third-quarter earnings, with the S&P 500 index posting 13% headline growth, meaning companies have weathered rising prices and tariffs to beat consensus estimates. Additionally, the Federal Reserve is expected to cut interest rates again in December, which will provide further tailwinds for interest rate-sensitive companies. Typical year-end earnings concerns also have the potential to push prices higher. Asset managers that have been late to the market are coming off the sidelines and using capital to shore up their portfolios in a last-ditch attempt to outperform their benchmarks. November’s weakness could also mean the stock market is poised for a rebound, especially given the punishment some fast-rising technology companies have received. Nvidia alone fell 13% in November. Super Micro Computers was the worst performer in the S&P 500, dropping 35%. Coinbase fell 21%. As a result, Mahoney predicts the path forward will be more profitable for stock pickers betting on the winners and losers in the AI economy. After accumulating cash over the fall, the investor said he is back investing in technology he considers attractive investments, such as Microsoft and AMD. “We’re still picking companies that we think are leaders,” he said. Some fear the recent decline could continue. Concerns remain that soaring artificial intelligence stocks are borrowing too much from the future to justify their current valuations, which could be a hindrance to the market’s excesses. Javed Mirza, managing director of quantitative and technical strategies at Raymond James, said this week that some recently triggered technical indicators indicate a “correction phase” that could cause the S&P 500 to fall by as much as 10% over the next three months. Week Ahead Calendar All Time (ET). Monday, December 1st Tuesday, December 2nd Earnings: CrowdStrike Holdings Wednesday, December 3rd 8:30 a.m. Import Prices (September) Earnings: Salesforce, Dollar Tree Thursday, December 4th Earnings: The Cooper Company, Ulta Beauty, Hewlett-Packard Enterprises, Kroger, Brown-Forman, Fastenal, Hormel Foods, Dollar General Friday, December 5th
